 Featured Publication Governments often rely on inspections by independent auditors to ensure that firms comply with regulations ---- such as environmental, financial, or safety standards. But when firms directly hire and pay auditors, these inspectors may be more beholden to their clients than the truth, leading to underreporting of violations and as a result, poor compliance. New research by Rohini Pande, Esther Duflo, Michael Greenstone, and Nicholas Ryan in Gujarat, India (forthcoming in the Quarterly Journal of Economics), shows how changing the way environmental auditors are paid and who they are accountable to can increase accurate reporting and ultimately reduce polluting emissions. Read more >> |
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Knowledge has become central to modern theories of growth. It is embodied in goods that are traded across the world. But how does this knowledge accumulate, and can it transfer across national borders? While knowledge diffusion has been shown to decline strongly with geographic distance, a new paper by Ricardo Hausmann, Cesar Hidalgo, and Dany Bahar highlights the power of its effect between neighbors. The research shows that a country is 65% more likely to export a product if a neighboring country is already an exporter. The paper examines how knowledge is shared, and offers important implications for global markets, trade patterns, product adoption and export growth, and how comparative advantage evolves between nations. Read more >>
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The U.S. has spent nearly $90 billion on humanitarian and reconstruction efforts in Afghanistan. A decade later, how capable is the Afghan government? Can it perform standard functions and meet the basic expectations of its citizens? And what is the chance that it will continue to do so after the departure of foreign funds and expertise? Many analysts have deemed Afghanistan a failure in state-building. Research fellow Frauke de Weijer examines how capability traps have been formed in Afghanistan. Read more >>
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